The smiling faces of Paris Hilton and Ryan Seacrest made surprise looks before the Louisiana Senate for Friday's hearing on prohibited gambling.
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No, they weren't personally in participation, but the world-famous celebs were notably included in a slide discussion on social and sweepstakes gambling establishments - the controversial sites using both free casino-style games and rewarding rewards, such as cash, present cards or cryptocurrency. In one advertisement, the fist-pumping Seacrest is seen Casino, where anyone can 'bet complimentary,' while a crop-topped Hilton holds a chip for sweepstakes operator, Wow Vegas, in the other.

The websites are simply two cogs in the multibillion-dollar industry that now discovers itself besieged by lawsuits. In the eyes of many video gaming corporations, not to point out lawsuit complainants and state regulators, sweepstakes gambling establishments serve as traditional casinos, just without the oversight, consumer defenses and tax laws. So not only can they prevent the high 24-percent federal sports betting levy, however sweepstakes operators aren't based on regulatory difficulties like anti-money laundering and responsible-gaming defenses.

One operator, Australia-based Virtual Gaming Worlds (VGW), reported $4 billion in earnings in 2015 alone. Now the business deals with allegations of unlawful gambling in a New York lawsuit that claims VGW utilizes celebrity endorsers to 'create a veneer of authenticity' around its item. (See VGW's declaration listed below)

'I'm unsure" if you do not trust us, you can trust Paris Hilton" is a winning message for business operating multibillion-dollar illegal operations out of places like Malta, Isle of Man, or US mail drops,' Friday's speaker, Howard Glaser of video gaming corporation Light & Wonder, told DailyMail.com.

Sweepstakes endorsers consist of a variety of celebrities from gambling lovers Drake and DJ Khaled to swimmer Michael Phelps, in addition to NBA stars Karl-Anthony Towns and Paul George - none of whom use any distinctions in between traditional sports betting and sweepstakes play.

Paris Hilton is seen plugging Wow Vegas, one of numerous sweepstakes gambling establishments discovered online

Ryan Seacrest urges fans to play at Chumba Casino, where numerous - however not all - games are totally free

Drake has an offer with social sweeps casino, Stake, that he frequently promotes on social networks

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Instead, advertisements usually focus around the social aspect of the gambling establishments, while omitting the capacity for real sports betting losses.

Others lure customers with guarantees of prizes. One such operator, Stake, ran a social networks advertisement flaunting Drake's cars and trucks, planes and mansions before pivoting to video of the rapper playing online casino-style video games.

'Daddy, why do we have so much cash?' check out the very first caption on the screen.

Another caption described: 'Because I never ever quit.'

The discrepancy between sports betting websites and social or sweepstakes gambling establishments is a bit complex, however operators of the latter insist they're not included with the former.

A representative for a market trade group, the Social and Promotional Gaming Association (SPGA), discussed its members are not in direct competitors with online casinos and sportsbooks. Furthermore, according to SPGA data, most of the gamers on social-sweepstakes casinos are sports betting complimentary.

'Most social sweeps clients never ever purchase,' the SPGA representative told DailyMail.com. 'The minority of consumers who make purchases do so in amounts far smaller sized than the normal deposit or bet size at real-money online gambling sites.'

Social gambling establishments provide consumers a chance to play casino-style games with good friends. Players have the choice to buy valueless currency often described as 'gold coins,' which can not be exchanged for genuine money, however can be used to open different features within the video games.

But within the world of social casinos exists sweepstakes gaming, allowing customers to obtain other currency known as 'sweeps coins' that can be exchanged for money or other rewards.

And therein lies the capacity for monetary losses, like the ones declared by complainants in Florida, Georgia, New Jersey and New York. One gamer informed the Washington Post he lost more than $100,000 on sweepstakes gambling establishments in the previous year after continuing to purchase more coins in pursuit of money and other things of value.

The Philadelphia 76ers' Paul George is seen promoting an International Poker occasion

Social sweeps casino Stake ran an ad showing off Drake's automobiles, airplanes and estates

Karl-Anthony Towns of the New York City Knicks is another NBA star plugging VGW's Global Poker

Traditional online gambling establishments are prohibited in all however seven states, which has actually helped to fuel the popularity of sweepstakes casinos.

Anyone over the age of 18 can access the sweepstakes websites, which do not need normally need identification. However, sites like Chumba will ask for IDs from gamers attempting to withdraw any funds.

Many sites, like the crypto-compatible Stake, allow customers to send mail-in ask for complimentary sweeps coins, offered the players follow painfully particular guidelines. What's more, gamers are frequently rewarded with sweeps coins merely for registering, thereby providing a reason to try their hands at any variety of casino games for an opportunity to win - or lose - real money.

So why are sweepstakes websites permitted to operate in 48 states, while online gambling establishments are prohibited in all however 7?

According to the stakeholders, their product is the free casino-style gaming, and the real-stakes competition is simply a method of promoting their support.

'Social sweepstakes video games are simply a type of online entertainment,' an SPGA representative informed DailyMail.com by email. 'No purchase is needed to dip into social casinos with sweepstakes prizes. Consumers never ever need to pay for an opportunity to win rewards. That absence of a purchase requirement - or" consideration" - is an essential difference between social sweeps and traditional online sports betting websites like casinos.'

Think about the method that McDonald's utilizes its yearly Monopoly game to promote its food: Customers aren't paying to bet, but rather they're purchasing hamburgers and french fries that provide them the opportunity to win financially rewarding prizes, such as a $1 million prize.

And without a purchase requirement, or 'factor to consider', the video game itself doesn't satisfy the definition of sports betting in the US.

'Sweepstakes are an enduring approach for promoting all sort of everyday companies in the United States, everything from burgers to magazine subscriptions to coffee and home improvement shops,' the SPGA spokesperson informed DailyMail.com. 'Sweepstakes promotions are routinely used by a who's who of household names like AT&T, Chase, Home Depot, Marriott, Starbucks, and Wal-Mart.'

But to many gambling market insiders, that argument does not cut it.

For starters, video gaming attorney Daniel Wallach points out, McDonald's Monopoly game doesn't run indefinitely. Rather, it has a well-defined beginning and end, consequently suggesting the sweepstakes is not the fast-food giant's main product. Instead, the sweepstakes is being utilized to promote genuine products like french fries, shakes, and the Filet-O-Fish.

'They do not last forever and they're typically not connected to casino-style video games of possibility,' Wallach told DailyMail.com. 'They're just money free gifts.

'The sweepstakes [casinos] possess none of the qualities frequently related to McDonald's-design sweepstakes promos,' Wallach continued. 'Besides running in all time, the sweepstakes casinos provide" casino-like" payouts, generally 80 percent or more of profits, whereas the typical payout portion for a short-term advertising sweepstakes is an insignificant share of the income made by the company [typically less than one percent]'

Wallach is fast to liken the online social sweeps gambling establishments to the internet coffee shops that emerged in Florida, providing customers the opportunity to play casino-style games for genuine prizes. A number of those brick-and-mortar facilities have actually given that been shuttered over accusations of illegal gambling.

DJ Khaled is among several star spokespeople for VGW's Global Poker brand

Now, Wallach argues, social sweeps casinos need to face similar analysis.

'These differences are not approximate,' Wallach said of social sweeps casinos. 'They have actually consistently been pointed out by courts and state attorney generals as crucial consider identifying that a sweepstakes promotion was in truth a guise for unlawful gambling.'

One of the casino industry's leading trade companies, the American Gaming Association, is now pushing legislators to investigate sweepstakes operators and, in many cases, enact new legislation on the problem.

'Consumers are being denied of defenses and states are forgoing substantial tax and earnings chances as this sports betting changes that conducted through regulated channels,' read a well-circulated AGA memo.

And then there are the complainants who have taken legal action against social casinos in more than a dozen states.

Sweepstakes gambling establishment operators paid a combined $14.2 million in four separate cases in Kentucky without confessing any wrongdoing, according to the Washington Post. Meanwhile VGW accepted pay $11.75 million in one class-action claim, stating the settlement was made to prevent legal costs and continued litigation.

Michael Phelps has actually signed a handle the VGW Group, which owns Global Poker

In the newest suit, which is mainly comparable to its predecessors, New York state citizens Lamar Prater and Rebecca Pratt both declare to have actually lost well over $1,000 to VGW, which is explained in the filing as an 'prohibited sports betting enterprise. '

Apple and Google have also been named as offenders in claims for hosting the sweepstakes sites. But unlike VGW, neither tech business reacted to DailyMail.com's ask for remark.

'We typically do not comment on matters before the courts,' a VGW representative told DailyMail.com via e-mail. 'However, we keep in mind that this claim has actually only just been submitted with the court and VGW has actually not been officially served.

'We have complete self-confidence in our compliance with all laws and policies where we operate, and stay confident about the future,' the spokesperson continued. 'We continue to use our free-to-play games throughout many of North America, as we have for more than a years, creating not just great video games, user experiences and entertainment, however likewise guaranteeing this is done safely, responsibly and at the greatest level of standards.

'More broadly, we 'd reiterate that class actions and other lawsuits and arbitrations are reasonably typical throughout the online social games market (and the US more broadly), and our standard practice is that we plan to strongly safeguard any claim which might be brought versus us.'
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The problems between traditional online gambling and sweepstakes casinos could show bothersome for some celebrity endorsers.

Towns, a star center with the Knicks, and the 76ers' George both back VGW's Global Poker brand name while the NBA is partnered with traditional gaming titans like FanDuel and DraftKings.

'It's paradoxical that expert athletes are hawking prohibited sports betting wagering 'sweeps' websites while at the very same time the leagues want to project a strong stance versus illegal gaming - especially when attempting to tamp down the occasional gambling scandal,' Glaser told DailyMail.com.

It was simply 8 months ago that Toronto Raptors forward Jontay Porter received a lifetime ban from the NBA over accusations he conspired with bettors. However, to be clear, Porter's scandal is unrelated to anything involving social or sweepstakes casinos.

Together with VGW, Apple and Google are being demanded hosting presumably unlawful sports betting sites

Regardless, Glaser sees sweepstakes gambling establishments as a significant issue for leagues such as the NBA.

'I 'd anticipate that a league crackdown on professional athletes backing sweepstakes sites is a matter of when, not if,' Glaser added.

Neither an NBA representative nor the players' representatives reacted to DailyMail.com's ask for remark. For that matter, spokespeople for Drake, DJ Khaled, Hilton, Seacrest and Phelps likewise overlooked to react to DailyMail.com emails.

Asked if their celebrity endorsers have a responsibility to discuss to consumers the distinctions and similarities in between iGaming and sweepstakes casinos, VGW insisted there is nothing more that requires to be done.

'We have complete self-confidence in our influencer and ambassadorial partnerships, and our company practices more broadly,' the representative said. 'A few of our worths are" our players come initially" and" we do what's right", and we put our worths at the core of everything we do.'
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Glaser, an outspoken challenger of sweepstakes sites, sees things differently.
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'Celebrities who lend their names to shady illegal gaming sites are, at a minimum, putting their credibilities at danger in addition to courting civil and class actions by customers who allege harm,' Glaser said. 'There is likewise some threat that state regulators and state attorneys basic rope celebrity endorsers into enforcement efforts for assisting in illegal gaming.'

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